FRANKFORT, Ky. (WDRB) -- LG&E and Kentucky Utilities executives made their pitch for a solar-fueled facility to state regulators Monday, saying the time is right for the companies to expand into renewable energy.

At the same time, they acknowledged the proposed $36 million project in central Kentucky – the utilities' first foray into solar power -- would generate well less than 1 percent of customers' demand.

“No doubt it's a small piece,” David Sinclair, LG&E/KU's vice president of energy supply and analysis, said during the Public Service Commission hearing.

LG&E and KU plan to build the solar project on 100 acres at KU's E.W. Brown generating station near Harrodsburg, Ky. Louisville-based LG&E would own 39 percent of the venture, which must be approved by the PSC.

A decision on the proposal isn't expected before the end of the year, PSC spokesman Andrew Melnykovych said.

Ratepayers would pay about $25 million of the $36 million cost, with the rest covered by a tax credit the companies would recoup after construction is complete in 2016, according to estimates.

The field of solar panels would generate about 10 megawatts – compared with 24 megawatts at the nearby Dix Dam hydroelectric plant and more than 80 megawatts at the Ohio Falls hydroelectric station in Louisville. In contrast, LG&E's coal-fired Mill Creek plant produces 1,472 megawatts.

But Paul Thompson, the utilities' chief operating officer, said in testimony prepared for the case that the declining price of solar panels, tax credits and renewable energy certificates “helped create this opportunity.”

Environmental regulations also played a role.

“These developments, along with the increased likelihood of carbon constraints, have created a reasonable opportunity for the Companies to add a renewable source to their generation portfolio and gain the valuable experience that will result from constructing and operating that source,” he said.

Thompson said in testimony Monday that the solar plan remains a “prudent move” and said it won't create a significant operating cost; the panels will absorb sunlight and move it directly into the utilities' system.

Attorney General Jack Conway's office hasn't taken a position on the utilities' proposal, and it's unclear whether it will.

In Kentucky, Berea Municipal Utilities operates a 246-panel solar farm and the Grayson Rural Electric Cooperative runs a small demonstration solar project. The LG&E/KU venture would be the first of its kind in the state by an investor-owned utility, said Jack Barnett, chairman of the nonprofit Kentucky Solar Energy Society.

The utilities' plan “equals all the rest of the capacity in the state at the time of the proposal,” Barnett said.

“To see one of our investor-owned utilities finally see the light – in this case, the sunlight – it's really gratifying,” said Barnett, who attended Monday's hearing.

“I do think it can influence others and … break the ice and dispel the doubt people have had in their mind that solar doesn't work here, because that is not true,” Barnett said. “But until they see it they may not believe it.”

As part of the solar project, LG&E and KU had originally proposed new construction at KU's Green River plant in Muhlenberg County, but that project was scrapped after nine cities decided to opt out of their wholesale power contracts with KU.

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